USDCHF—monthly chart

You can see on the monthly chart that this month is showing a lower low than last month. The Swissy is also coiling. This is often the sign of continuation of the prevailing trend but there's enough uncertainty out there that it's not a given. In any case, even if the coil suggests continuation down, it could rise within the triangle to above 1.15. At that point it would encounter strong resistance from downtrend lines coming in with touches in 2003, 2006 and 2008 of which the triangle downtrend line is a part. Note that momentum, as represented by RSI, is good with it staying above oversold levels that accompanied prior drops.

In the short term, however, it has reached a high of 1.0618. This puts it smack into formidable resistance that has proven troublesome for it in the last five weeks. The resistance zone extends up to 1.0675. If it successfully clears that then additional gains may be in the cards with resistance at 1.0757, 1.0856 and 1.1138. Support is at 1.0600, 1.0582, 1.0525, 1.0487 and 1.0447. My plan is to buy into this pair on pullbacks.

Here's the monthly chart:










© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.